Hulu may rebrand itself as cable-like TV bundle provider

Hulu is considering a business model overhaul in order to stay competitive …

Hulu is considering a complete makeover of its business model, with the possibility of transforming into an online TV bundle provider that would make money from subscriptions in the same way as cable or satellite companies. That's just one of several options being considered within the company, according to unnamed insiders speaking to the Wall Street Journal, but something's gotta give if the company wants to make money and remain competitive.

The free-with-ads model isn't working out as well for Hulu as its creators had hoped, leaving the company trying to figure out ways to better monetize its content before the content providers move onto greener pastures. For example, "people familiar with the matter" have told the Journal that News Corp. and Disney are considering pulling free Fox Broadcasting and ABC content from Hulu, respectively, as they make money from other delivery solutions such as Netflix, Apple, and Microsoft.

Among the available options, Hulu is considering rebranding itself as a sort of online cable operator, where you can sign up for certain tiers of on-demand video content for a certain price. It's not clear whether Hulu would completely ditch its current model in favor of the TV bundles, but it's possible that the company would keep only the most recent TV episodes available for free and roll everything else into the bundles.

Other options include working out deals for Hulu-exclusive content, or to hold new episodes for two weeks before putting them online (some networks already hold the episodes for weeks they appear on Hulu). There's no time frame yet for such a shift because the model is only under consideration, but it appears clear that management is looking to shake things up in a major way.

This is all despite the recent launch of Hulu Plus, Hulu's pay subscription service that gives users access to full seasons of TV shows. At $7.99 per month, Hulu Plus has barely made a dent in the mindsets of Internet users—there's just not enough of an appeal to make it worth subscribing, and many (but not all) users also have a Netflix subscription where they can already get some of the same content. In fact, Hulu CEO Jason Kilar apparently agrees: insiders told the Journal that Kilar wanted to drop the price to $4.99 per month to be more competitive, but that both sides ended up settling on the higher number to give everyone a bigger cut.

Meanwhile, Netflix has continued to eat Hulu's lunch by aggressively making streaming deals with everyone on earth and offering a streaming-only option to consumers. There's hardly a set-top box or handheld device out there that doesn't have some kind of Netflix compatibility—Apple TV, Roku, PS3, Xbox 360, Wii, iPad, iPhone, various Blu-ray players, and more all have easy access to the streaming episodes. Contrast that with the availability of Hulu, which is limited to computers and a small handful of devices with native Hulu Plus apps.

It's no wonder Netflix is seeing so much success lately while Hulu looks to reinvent itself—when it comes down to it, people still prefer to watch TV and movies on their home theaters where their set-top boxes and massive TVs are, not on a computer screen. However, if Hulu can successfully repackage itself as an on-demand bundle provider and strike deals to bring its content to various set-top boxes, Netflix may finally get a run for its money.

Jacqui Cheng
Jacqui is an Editor at Large at Ars Technica, where she has spent the last eight years writing about Apple culture, gadgets, social networking, privacy, and more. Emailjacqui@arstechnica.com//Twitter@eJacqui